The Dubai air show

The Russians are coming—and the Chinese and the Canadians

THE distinguished-looking gentleman in traditional Arab dress being shown around a mockup cabin of Bombardier's new plane at the Dubai air show is Saleh Al-Awaji, chairman of Yemen's Felix Airways. So far, Felix has been doing mostly short hops around the Gulf, flying a handful of the Canadian planemaker's CRJ regional jets. But the airline has ambitions to get bigger and fly farther. So does Bombardier: the aircraft it would like to sell to Felix, and to airlines the world over, is the CSeries (pictured), a larger medium-haul jet that will take the planemaker into a bigger and potentially more profitable market, putting it in direct competition with Boeing and Airbus.

The CRJ series seats 50-100 passengers, whereas the category Bombardier is about to enter with the CSeries is the “narrowbody” class, with around 100-200 seats. Until recently airlines only had two choices in this market: Boeing's best-selling 737 and its (also hugely successful) archrival, the Airbus A320. With demand for air travel forecast to continue growing strongly notwithstanding any short-term economic turbulence, the 737/A320 category is looking ever more tempting to other aircraftmakers. And Bombardier is not the only one planning to enter it. A Chinese firm, Comac, is working on a contender called the C919, and Russia's Irkut has a narrowbody in development called the MC-21 (sometimes called the MS-21 in the West). Both are scheduled to have their first test flights in 2014.

For both Russians and Chinese, competing in the market for big commercial aircraft is not just a business opportunity but a national project. Yet Bombardier does not seem worried about having two such determined, state-backed rivals. Chet Fuller, an executive at the Canadian firm, says the Russians are “phenomenal” in matters of engineering and design but have no experience in offering what airlines expect these days: producing large quantities of such aircraft to demanding standards as well as reliably providing parts, maintenance and customer support. Kirill Budaev of Irkut admits that these are things his company needs to work on: it is actively seeking foreign partners to provide the expertise that it lacks in these areas.

As for the Chinese, “Ultimately they will succeed at anything they put their minds to,” says Mr Fuller. Perhaps this is why Bombardier is seeking to co-operate with Comac. The two types of planes could be marketed jointly, and the Canadians could help the Chinese firm through the stringent process of getting its C919 certified as airworthy. The firm's two models do not quite overlap, or not yet at least: the Chinese one is at the upper end of the 100-200 seat market whereas the initial versions of the Canadian CSeries will have up to about 150 seats.

Bombardier's main rival in the market for smaller regional jets, Embraer of Brazil, was also thinking of moving up into the narrowbody airliner category. But a few days ago it decided to drop this idea and will instead concentrate on producing a re-engined version of its E-series regional jets. Bombardier is happy having one fewer competitor in the market, but the Brazilians presumably would not have dropped out if they shared the convictions of the Canadians, Russians and Chinese that there will be lots of orders, and lots of profits, in breaking into the narrowbody duopoly.

Catching up with Airbus's chief operating officer, John Leahy, as he dashed between contract-signings and news conferences, your reporter asked him which of these rising competitors he feared most. Not the Canadians, Mr Leahy claimed, despite the fact that they are further ahead than the Russians and Chinese in bringing their new plane to market. Bombardier has been marketing the CSeries for three years and ought to have won more orders by now if the plane is going to succeed, he argues. Eventually, he predicts, the Canadian firm, lacking a determined state backer (unlike the Chinese and Russians), will cut its losses and give up. As ever, Bombardier takes Mr Leahy's barbs as a back-handed compliment: it says that it already has 133 firm orders plus 129 options or other draft purchase agreements for the CSeries—enough to repay the $3.4 billion cost of developing the plane, an official at the firm indicates.

Airbus is seeking to nip its new rivals in the bud by rushing out a re-engined version of its plane, to be called the “A320 neo”, instead of going for a completely new plane, which would have taken much longer to produce. Seeing how many orders Airbus was getting, Boeing decided to do the same, announcing a re-engined “737 MAX”. The Canadians, Russians and Chinese insist that the technology in their new planes will make them more cost-effective to run than the established duopoly's re-engined ones. Yet they will have to convince airlines to add another type of plane to their fleet—at a time when many are seeking to simplify their operations to save money.

Even so, the arrival of the Canadians, Russians and Chinese in the market will be a useful bargaining chip for airline bosses when negotiating the prices of 737s and A320s with Boeing and Airbus. Ryanair, a huge buyer of 737s, has already let it be known that it is talking to both Comac and Irkut. It will no doubt be expecting its continuing loyalty to Boeing to be well rewarded.

There is also a question whether (for right or for wrong) consumers in Western markets will feel comfortable flying a Russian- or Chinese-manufactured plane, at least in the near term. I expect to see Comac and Irkut playing mostly in emerging markets for the first years until they build up a track-record for safety

The flashy title doesn't match the content of the article. Clearly, nobody is worried about the Russians. They've always excelled at building military kit, while their clunky civilian products could only find a market through coercion in Soviet Block countries.

Hard to imagine that Western consumers (or Eastern ones, for that matter) will want to fly a Chinese-built plane, at least until the manufacturer has been in the market long enough to establish a safety record.

I agree that the competitor to be most fearful of would be China, given not only their manufacturing capabilities and their large domestic market, but also the deep pockets and determination of their government.

This increased competition will ultimately benefit the consumers, at the expense of the incumbents, Boeing and Airbus.

@ aaritz1: "Just like in this area, the developed markets, America and Europe, will keep facing more and more competition from the developing markets, which will in turn create better products, at cheaper prices for the world. The only drawback to this, is the state support that Russian and Chinese companies have, which by many standards is considered unfair in the markets."

I'm not sure what planet you're living on but Boeing and Airbus have been receiving state benefits/subsidies as long as I can remember, if i recall there was a WTO dispute over this several years ago. The fact of the matter is that both western companies also produce sophisticated military equipment, and for issues where national security and defense are involved, issues like promoting free trade and less protectionism matter little. I mean, you could probably have saved money outsourcing the F-22 manufacturing process to China. Was it done? No, for reasons to obvious to disclose. Developments in civilian technology are often example to the military. Take for example the Boeing 367-80 airframe. It was from this that the Boeing 707 passenger aircraft and the USAF KC-135 Stratotanker were developed. Do not be so naive to think that there are larger issues at play here than simple freemarket ideology.

Vectro, don't you worry. Soon Ryanair will be straping people standing up in a chinese airplane and people will be flying in it and believing they are having a good deal just because the ticket is cheaper.

Like others have commented, it will take some time and rides for folks to get used to riding on China made planes. In fact more time would be required than usual because COMAC’s C919, once certified and in production, is meant to satisfy China’s domestic need of thousands of such planes for short haul and feeder routes.

Then, I suppose, just like how Nissan started in the US: They began selling DATSUN cheap, humble and one-sy two-sy. And before you know it, it’s all over the place.

This is a prime example of how competition can produce better and better products for the end consumer and even at a better price. While Boeing and Airbus still control the majority of the market the new competition is forcing them to move forward or lose their customers. While on the consumers end they get a better product at a better price, and not to mention more options to chose from.

It's interesting that some of these comments reflect an outdated knowledge about Russian airplane industry. Believe it or not that industry is not new as it is in China which relied mainly on copying the Soviet/Russian planes and plane parts. Russian fighter planes have a great reputation for reliability and agility (see SU, MIG) as well as some of the helicopter companies (see Kamov and others). Give them a chance and don't get stuck in the old mindset.
cheers

The Airbus 318/19/20/21 and the Boeing 737-7/8/9 series are getting tired - reworked? Yes, renewed? No. The C Series from Bombardier is the only new smaller medium haul narrow body on the horizon. It won't be long before we find out if it's really any good. And as for Leahy: he's an Airbus salesman; what else could he say?

I think that the entry barriers are very high so the Airbus/Boeing duopoly will continue to be unchallenged for quite some time. The eyes will soon be on Bombardier whether they can deliver what the CSeries promises - now. If they do and manage not to be too late they will remain the no 3. Comac will start taking some sales and in about 15-20 years in my opinion may become the number 3. Unless the two Bombardier and Comac create a joint venture then the no 3 comes sooner. Irkut’s MC-21/Suchoi's Superjet are not likely to be successful as commercial airliners, they may be good cargo planes or large cabin business jets, but not sure if they can justify the development costs... It will be very difficult for Mitsubishi’s MRJ as well. The only one I don't count out is Embraer which has a good portfolio and established itself quite well. The business jet sector is even more crowded and it’s even harder to make profit there. Consolidations are very likely again…By the Chinese?...

The Russian aircraft would be competitive only with western engines. Russian engines have less than one-quarter the life of western ones and use as much as four times the fuel per passenger. That's been the problem for several decades.

This shows the growing power of developing markets in the world thanks to globalization. Just like in this area, the developed markets, America and Europe, will keep facing more and more competition from the developing markets, which will in turn create better products, at cheaper prices for the world. The only drawback to this, is the state support that Russian and Chinese companies have, which by many standards is considered unfair in the markets. It world leaders are not able to come to solutions/agreements about this in the near future, maybe America and its western counterparts should start doing the same as the Chinese and Russians, regarding their companies.

I'll take "old and outdated" any day when it comes to airplanes. I would change the words to "tried and tested and debugged", however. how many crashes have been due to some engineering problem? Older standard models have had these design flaws worked out of them. Moreover, a standardized model brings huge savings in reduced need for parts inventory. Standardized models also allow pilots to become experts at flying that model.